Smaller packs boost Indian FMCGs

3 September 2013

NEW DELHI: FMCG brands are responding to the current economic difficulties in India by introducing more, smaller packs at lower price points and extending this tactic to urban areas.

The Business Standard observed that, previously, lower priced products, typically between Rs 5 and Rs 20, had been aimed at rural areas but, as consumer sentiment weakened, with rising inflation and a weakening rupee, these were also being pushed in towns and cities as companies sought to keep up volume sales and protect market share.

HS Tibb, marketing director at Kellogg's India, the breakfast cereals maker, said that the launch of Rs 10 packs had helped the company maintain brand leadership and that it would extend the practice into other categories.

As an aside, he also noted that localising flavours had also proved successful.

Emami, an FMCG business based in Kolkata, now offers products starting from as little as one rupee, such as Navranta hair oil. "What the consumer likes about these range of products is value-added product at such a low price point," said Naresh H Bhansali, director of finance, strategy and business development.

Smaller pack sizes can have the added benefit of attracting new consumers, added Ullas Kamath, managing director of Jyothy Laboratories.

The FMCG sector is not the only one having to react to the new economic situation. Fast food brands, for example, have seen the frequency of consumption and rate of acquisition of new customers suffering. They are having to look at ways of offering greater value, whether that be lower priced menus, larger items for the same price or BOGOF offers.

"Value is key in the current economic scenario," Tarun Lal, general manager at KFC India, told Livemint.

The highest prices rises have come in three essential areas for consumers – food, fuel and utilities – so leaving less for spending elsewhere, with eating out, entertainment and fashion items all suffering as a result.